Dow has been well supported at 11,400 level. An ascending wedge has been formed getting ready for a breakthru of 11,800 in this coming week.

Crude oil came down to test the USD110/barrel. Given the steepness of the drop in crude oil price, the next level of support at USD100 is a primary support. Breaking this pyschological barrier would be a strong signal that the primary trend has been reversed downwards. This would spark a rally in the stock market.

However, it is still too early to say that we are out of the bear market.

The crude oil rally encountered resistance at $120/$122 per barrel. Expect sellers to force another test of support at $110. A fall below $110 would signify a clear breakout from the trend channel, warning of a primary trend reversal. And penetration of the key psychological barrier of $100 would confirm.

Last edited by orangtua on Sun Aug 24, 2008 10:26 pm; edited 1 time in total

The bear market in stocks is unlikely to end, however, even if we see a primary trend change in crude oil. Not until there is a clear bottom in the housing market. The Dow is headed for another test of the band of resistance between 11750 and 11850. Low volume indicates that resistance is likely to hold — followed by a further test of 11000.

Oil falls as dollars strengthen against euaro and yen. Oil slumped below $113 a barrel seeking and testing the support of $110stay tune.

orangtua wrote:

The crude oil rally encountered resistance at $120/$122 per barrel. Expect sellers to force another test of support at $110. A fall below $110 would signify a clear breakout from the trend channel, warning of a primary trend reversal. And penetration of the key psychological barrier of $100 would confirm.

The bear market in stocks is unlikely to end, however, even if we see a primary trend change in crude oil. Not until there is a clear bottom in the housing market. The Dow is headed for another test of the band of resistance between 11750 and 11850. Low volume indicates that resistance is likely to hold — followed by a further test of 11000.

The major indices ended Tuesday mixed in a choppy session that marked the lowest volume of the year. Corporate news was light, but there was plenty of economic data and movement in commodities.

The S&P 500 posted a 0.4% gain with seven of the ten economic sectors in the green as traders digested a spike in crude prices and several better-than-expected economic releases. Only 856 million shares exchanged hands on the NYSE, marking the lowest amount of volume in 2008.

Crude prices traded in a volatile manner, falling 2.4% in early trade, and then spiking to a gain of 2.4% on threats of a hurricane disrupting production in the Gulf of Mexico. Crude prices eventually settled with a gain of 1.0% at $116.26 per barrel, while natural gas prices rallied 5.7%.

The energy sector (+1.8%) provided leadership, benefiting from the gains in crude and natural gas prices. Anadarko Petroleum (APC 61.54, +3.70) gave the sector an added boost after the company authorized a share repurchase program of up to $5 billion.

Financials stocks fell to a 1% loss in afternoon trading on news that the FDIC increased the number of problem institutions to 117 in the second quarter from 90, with assets at problem institutions increasing to $78 billion from $26 billion. This headline is not as bad as it seems, considering $32 billion of the asset increase was due to IndyMac (which already failed) and 98% of institutions remain well capitalized. As a result, financials recovered from the knee-jerk reaction to the headlines to finish the day with a 0.7% gain.

The tech sector was the worst-performing area with a 0.4% loss. The tech-heavy Nasdaq composite posted a loss of 0.2% as a result.

On the economic front, July new home sales rose 2.4% to a seasonally adjusted annualized rate of 515,000 from a downwardly revised June reading of 503,000, according to the U.S. Department of Commerce. Economists expected 525,000 sales. New home sales are down 35% from the prior year, but have held somewhat steady near 500,000 in recent months.

The S&P/Case-Shiller 20 city composite posted a 15.9% year-over-year drop in home prices in June. This marks the largest decline on record, but was slightly better than the expected 16.2% decrease. In addition, the acceleration of the decline is moderating, indicating that a bottoming in the housing industry is taking place. A separate report from OFHEO showed flat home prices in June compared to May, which topped expectations. Homebuilding stocks fell 2.9%.

Consumer confidence rose 9.6% month-over-month in August to 56.9, topping the median economist estimate of 53.0. The survey shows increased plans to buy a car, a home and major appliances within the next six months.

Briefing.com does not put much weight into confidence surveys compared to hard data. Nonetheless, the reading counters conventional wisdom that the consumer is going into retrenchment mode.

Separately, the FOMC released the minutes from its Aug. 5 meeting. The minutes did not tell the market anything it did not already know, and as a result had a limited trading impact. DJ30 +26.62 NASDAQ -3.62 NQ100 -0.2% R2K +0.4% SP400 +0.5% SP500 +4.67 NASDAQ Adv/Vol/Dec 1520/1.46 bln/1296 NYSE Adv/Vol/Dec 1961/856 mln/1145

4:20 pm : Stocks rose Wednesday in a thinly traded and choppy session. An encouraging reading related to the manufacturing sector helped offset disappointment over the third straight gain in oil prices.

Volume was very light, with only 820 million shares exchanging hands on the NYSE -- marking the lowest level in 2008, and the fifth consecutive session marking a new low.

In economic news, the July durable goods orders report is a positive sign for the economy and contradicts the impression of a weak manufacturing sector. Orders rose a strong 1.3% month-over-month, topping the expected unchanged reading. Excluding transportation, orders rose 0.7%, which is better than the median economist forecast that called for a decline of 0.7%.

Enthusiasm over the durable orders report was held in check by a gain in crude prices, which rose 1.8% to $118.31 per barrel. The buying interest in crude was fueled by increased threats that Tropical Storm Gustav may disrupt production in the Gulf of Mexico. The National Oceanic Atmospheric Association said this morning that Gustav is on track to hit Louisiana early Monday as a major hurricane.

The energy sector was a standout, benefiting from the rise in oil prices. In addition, "crack spreads" widened as the price of gas (+2.4%) rose faster than the price of oil, giving a boost to refiners (+5.0%).

3:30 pm : Stocks are giving back some gains going into the final half-hour of the session. All ten sectors have seen pullback.

Tomorrow brings the preliminary second quarter GDP reading and new jobless claims for the week ended Aug. 23. GDP is expected to be revised upward to 2.7% from 1.9%, while jobless claims are forecast to slip slightly to 425,000.

Tuesday was a disappointing session for stock market bulls. Stocks ran out of steam, giving up strong opening gains to finish the day with a loss.

Shortly after the opening bell, the Dow, Nasdaq and S&P 500 rallied 2.1%, 1.9% and 1.6%, respectively, benefiting from a sharp sell-off in commodities and a relief trade after Hurricane Gustav did not cause any major structural damage. But stocks steadily declined throughout the afternoon, with the Dow, Nasdaq and S&P 500 finishing the day with a loss of 0.2%, 0.8% and 0.4%, respectively.

There was no apparent catalyst for the change in sentiment, although the retreat may have been compounded after traders were disappointed that stocks were unable to maintain their opening gains.

With regard to commodities, the CRB Index fell 3.4% after the damage caused by Hurricane Gustav was less than expected. Crude prices were down 8.7% in overnight trading, but recovered some losses to finish with a decline of 4.5% at $110.30 per barrel.

The drop in commodity prices sparked selling interest within commodity producing stocks. The energy sector declined 4.6% and the materials sector fell 2.5%, acting as a major drag on the broader market.

Conversely, commodity-cost sensitive stocks got a boost, although they gave up much of their intraday advance by the end of the session, and were unable to offset the steep declines in the energy and materials sectors. The consumer discretionary sector rose 1.8%, with retailers climbing 3.0%. Airlines advanced 6.6% and automakers gained 3.1%.

The financial sector outperformed with a 1.8% gain. Bank of America (BAC 32.62, +1.48) provided leadership after Goldman Sachs assumed coverage of BofA with a Buy, citing earnings growth potential, according to the AP. Lehman Brothers (LEH 16.06, -0.03) gave up an early gain to finish near the unchanged mark, despite reports that Korea Development Bank confirmed that it is in talks to invest in Lehman Brothers.

In other corporate news, Merck (MRK 34.83, -0.84) and Schering-Plough (SGP 19.08, -0.32) came under selling pressure due to uncertainty regarding cancer risks of the cholesterol drug Vytorin. The healthcare sector still managed to gain 0.1%.

In economic news, the August ISM Index, a national manufacturing survey, indicated a very slight contraction in the manufacturing sector, although it is still indicative of growth in the overall economy. Specifically, the index slipped 0.1 to 49.9, which was nearly in-line with the expected reading of 50.0. A reading below 50 reflects contraction in manufacturing. On a positive note, the prices paid index declined to 77.0 from 88.5, suggesting an easing in inflationary pressures.

Separately, July construction spending showed a continued poor trend. Housing remains the weakest area in the economy, although Briefing.com expects a leveling off in the months ahead. Specifically, construction spending fell a larger-than-expected 0.6%, versus the expected 0.4% decline. However, the current level of spending is actually above estimates after the June change was revised sharply higher to +0.3% from -0.4%. DJ30 -26.63 NASDAQ -18.28 NQ100 -1.2% R2K -0.1% SP400 -1.0% SP500 -5.25 NASDAQ Adv/Vol/Dec 1367/1.95 bln/1510 NYSE Adv/Vol/Dec 1521/967 mln/1450